Choosing the forex broker

Registration with a regulatory authority

Registration with a regulatory authority

Regulation of forex brokers is meant to protect the traders and is important for you. Registered brokers will therefore be monitored to verify complicity with set guidelines. As a trader you do not want to be taken advantage of by your broker and so you should choose a broker that is registered as mandated by the laws of the land.

Currency spread

The spread is the amount a trader will pay for each trade executed. Some brokers offer fixed spreads while others can have variable ones. Understand how the spread will influence your forex trading strategy.

Leverage

The amount of leverage offered by the broker will determine how much money you will be able to control when you use this facility. Different brokers offer different ratios. If you are just starting out you may not want to venture into highly leveraged positions. As your confidence levels increase, this issue will begin to matter to you.

Forex account limitations

If you are have a small equity you will need to have a micro account that allows you to trade small lots. Not all brokers have accounts that are suitable for small traders. Your research should take into consideration how small you would want your initial investment to be.

Rollover interest

At the end of each trading day some brokers can charge an interest on open positions. This can reduce your profits significantly. You should check what terms each broker offers in this regard.

Additional things to consider are the broker's experience, forex trading platform, market commentaries and customer service. Joining forex discussion forums can help you to compare services as perceived by customers like you. Other people's experiences will confirm whether a broker offers good service or not. Keep in mind that some people can have some unfounded biases for or against certain brokers.

Having considered what brokers offer from your research, you can formulate your key points. These should be the most important things you would prefer from a forex broker. This will help you to narrow down the number of brokers to about 5 or less for comparisons. Once you have satisfied yourself with your research you can make the broker comparisons. From your list you can select the best 2 or 3 and open demo accounts with these. The best way to determine the quality of service you wish for is to try it out. You will be able to ask questions and ultimately decide which broker will give you the most satisfaction. You will also in the mean time develop a feel of the forex trading platforms.

Choosing the forex broker

By: mqforex

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